If I qualify for $100k over my accepted offer but my income has dropped. What are my chances of closing?

Asked by Udo, La Quinta, CA Fri Jun 21, 2013

Me and my gf are purchasing a home together(w/ a contract between us). We were told we qualified for $350k by our lender after she reviewed our credit and 2010/2011 tax forms in December. I have excellent credit(790 median) but I'm self employed. The thing is I made 42k in '10 after depreciation and 64k(81k b4 dep) in '11 but my loan officer now asked me for my 2012 taxes now that we have had an offer accepted for 200k. My 2012 net income is 50k(68 b4 dep). So my 2011/2012 income average is actually higher than my 2010/2012 income but the loan officer says the underwriter can deny my loan based on the fact that my income has dropped this year even though I qualify for the amount and my 2012 income is higher than my 2010. She said to make a statement as to why my income dropped in 2012.
What are some good reasons to state and does anyone have any advice or predictions on what will happen. I rent out a home w/ 25% equity and my gf only made 22k if that makes any difference.

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Thierry Abel, Mortgage Broker Or Lender, Corte Madera, CA
Fri Jun 21, 2013
If your self-employment income has come down in 2012 compared to 2011 then they will not average these 2 years, they will just use 2012...and most likely would want to see a P&L for 2013.

What was your ratio before, and what do you think it is now?

Cheers
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Suzanne MacD…, Agent, Morristown, NJ
Fri Jun 21, 2013
Follow the advice of your loan officer and give them an explanation. It's really the only way to know for sure.
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